Quarterly update from Mutual & Federal

Mutual & Federal, one of South Africa’s largest and most trusted short-term insurers today released its business update for the three months ended 31 March 2009.

Gross premiums declined by 7% over the comparative period last year. This was largely attributed to a 43% reduction in personal schemes premiums, following the cancellation of a number of unprofitable portfolios in 2008.

Risk Finance premiums contracted by 16% due to a reduction in reinsurance received from furniture retailers. Following the decline in premiums, the solvency margin (the ratio of net assets to net premiums) increased to 42% at 31 March 2009 from 41% at 31 December 2008.

Keith Kennedy, managing director of Mutual & Federal said, “The trading conditions in the short-term insurance industry were very challenging in the first quarter of 2009. This is largely due to the number of commercial and industrial fires combined with the recent widespread rains, which resulted in property damage leading to an increase in claims.”

Mutual & Federal successfully completed a restructure where operations were moved from a fully decentralised structure to a regionalised model. In addition, the implementation of a sophisticated insurance system is expected to produce substantial service and economic benefits once employed across all business portfolios.